Buying your first home is one of life’s biggest milestones, but saving for a deposit can often be one of the biggest challenges. The Scottish Government’s newly launched First Homes Fund aims to make home ownership more accessible by offering eligible first-time buyers up to £10,000 towards the purchase of a property in Scotland.
Whether you’re just starting your property search or preparing to make an offer, understanding how the scheme works can help you decide whether it’s the right option for you.
First Homes Fund at a glance
✔ Up to £10,000 towards your first home
✔ Available on properties worth up to £300,000
✔ No monthly repayments or interest
✔ Can be used with a Lifetime ISA or Help to Buy ISA
✔ Available to eligible first-time buyers purchasing a home in Scotland
What is the First Homes Fund?
The First Homes Fund is a Scottish Government shared equity scheme. Rather than providing a loan that is repaid through monthly instalments, the Government contributes towards the purchase price in return for an equity share in the property.
This means there are no monthly repayments and no interest charges on the Government’s contribution. Instead, the equity share is normally repaid when the property is sold or in certain other circumstances set out within the scheme.
Importantly, buyers remain the legal owners of their home. Their name appears on the title deeds, they are responsible for their mortgage repayments, insurance, maintenance and repairs, and they enjoy all the rights that come with home ownership.
Who can apply?
The scheme is open to eligible first-time buyers purchasing a property in Scotland as their main residence.
To qualify, applicants must:
- Never have owned a home anywhere in the world, either individually or jointly.
- Purchase a property in Scotland that will become their main and only home.
- Take out a capital repayment mortgage covering at least 25% of the purchase price (or valuation, whichever is lower).
- Purchase a property with a value of £300,000 or less.
Joint applications are also welcomed. Where one buyer has previously owned a property, it must be sold before the purchase completes, and only one First Homes Fund award is available per purchase.
The scheme can also be used alongside a Lifetime ISA or Help to Buy ISA, where applicable.
Understanding shared equity
Although shared equity may sound complicated, the concept is relatively straightforward.
If, for example, you purchase a property for £200,000 and receive the maximum £10,000 contribution through the First Homes Fund, the Scottish Government would hold a 5% equity share in your property.
If the property’s value increases before you sell, the amount repaid reflects that same percentage. Equally, if the property’s value decreases, the Government shares in that reduction.
While the Government has an equity interest, you remain responsible for owning and maintaining the property throughout your time there.
Applying for the First Homes Fund
Applications are made through Link Housing, which administers the scheme on behalf of the Scottish Government.
Before applying, buyers should have:
- A mortgage decision in principle.
- Details of their solicitor.
- Evidence that their mortgage repayments will not exceed 45% of their net income.
- A Home Report (for existing properties) or reservation agreement (for new-build homes).
Successful applicants receive an award letter that is valid for three months. During this period, a purchase must progress to an agreed move-in date, otherwise a fresh application may be required.
Applicants should also be aware that a £650 administration fee applies following a successful application, alongside the usual costs associated with buying a home, including legal fees, registration dues and any Land and Buildings Transaction Tax (LBTT) that may be payable.
Brian Sutton, Residential Property Partner at James & George Collie, commented:
“The First Homes Fund is a welcome initiative that could help more people take their first step onto the property ladder. Buying your first home can feel overwhelming, but with the right support, it doesn’t have to be. We work closely with trusted mortgage advisers and guide clients through every stage of the legal process, helping make their purchase as straightforward and stress-free as possible.”
Why your solicitor matters
Buying your first home involves much more than having an offer accepted, and buying through a shared equity scheme introduces additional legal documentation that must be carefully handled.
Our experienced residential conveyancing team can explain how the First Homes Fund works, liaise with your lender and the scheme administrator, ensure the Scottish Government’s equity interest is correctly recorded, and oversee the legal aspects of your purchase from start to finish.
Seeking legal advice early in the process can help ensure everything runs as smoothly as possible.
Thinking about buying your first home?
For many buyers, the First Homes Fund could make home ownership achievable sooner than expected.
If you’re considering buying your first home and would like to find out whether the scheme could work for you, our experienced residential conveyancing team would be delighted to help. From explaining the legal process to completing your purchase, we’re here to support you every step of the way.
To find out more or speak to a member of our team, get in touch today.